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Risk management and insurance at reliance life insurance

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Risk management and insurance at reliance life insurance

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reliance life insurance
about reliance life insurance company
organization structure
reliance life insurance vision
theme of study
introduction to risk management
process of risk management
analysis and interpretation of risk management

reliance life insurance
about reliance life insurance company
organization structure
reliance life insurance vision
theme of study
introduction to risk management
process of risk management
analysis and interpretation of risk management

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Risk management and insurance at reliance life insurance

  1. 1. SUMMER INTERNSHIP REPORT on “ Risk Management & Insurance” undertaken at “ Reliance Life Insurance Co. Ltd ” Pres ented BY NA ME :TA R UN KA S HNI
  2. 2. COMPANY’s PROFILE • G r o u p : Re l i a n c e A n i l D h i r u b h a i A m b a n i G ro u p • F o u n d e d : 1 9 6 6 • C o m p a ny N a m e : Re l i a n c e L i fe I n s u ra n c e C o . Lt d • Ty p e o f C o m p a ny : P r i v a t e L i m i t e d C o m p a ny • I n d u s t r y : L i fe I n s u ra n c e • H e a d q u a r t e rs : M u m b a i , M a h a ra s h t ra , I n d i a • P r o d u c t s : I n d i v i d u a l a n d G ro u p I n s u ra n c e • To t a l A s s e t s : R s . 1 5 0 B i l l i o n • N e t P r o f i t : R s . 3 B i l l i o n Ke y P e o p l e : • F o u n d e r : M r. D h i r u b h a i A m b a n i • C h a i r m a n : M r. A n m o l A m b a n i • C h i e f E xe c u t i v e O f f i c e r : M r. A s h i s h Vo h ra • C h i e f I n v e s t m e n t O f f i c e r : M r. A k h i l e s h G u p t a • C h i e f F i n a n c e O f f i c e r : Po o r n i m a S u b ra m a n i a m • C h i e f H u m a n Re s o u r c e O f f i c e r : S r i n i v a s L a d w a
  3. 3. ABOUT RELIANCE LIFE INSURANCE CO. LTD. • R e l i a n c e L i f e I n s u r a n c e C o m p a n y i s a m o n g s t t h e l e a d i n g p r i v a t e s e c t o r l i f e i n s u r a n c e c o m p a n i e s i n I n d i a i n t e r m s o f i n d i v i d u a l W R P ( w e i g h t e d r e c e i v e d p r e m i u m ) a n d n e w b u s i n e s s W R P. T h e c o m p a n y i s o n e o f t h e l a r g e s t n o n - b a n k s u p p o r t e d p r i v a t e l i f e i n s u r e r s w i t h o v e r 1 0 m i l l i o n p o l i c y h o l d e r s , a s t r o n g d i s t r i b u t i o n n e t w o r k o f o v e r 7 0 0 b r a n c h e s a n d m o r e t h a n 7 5 , 0 0 0 a d v i s o r s a s o n M a r c h 3 1 , 2 0 1 8 . T h e c o m p a n y h o l d s C l a i m S e t t l e m e n t R a t i o o f 9 5 . 1 7 % a s o n M a r c h 3 1 , 2 0 1 8 . • R a t e d a m o n g s t t h e To p 3 M o s t T r u s t e d L i f e I n s u r a n c e S e r v i c e B r a n d s b y B r a n d E q u i t y ‘ s M o s t T r u s t e d B r a n d s S u r v e y 2 0 1 8 , t h e c o m p a n y ’s v i s i o n i s “ To b e a c o m p a n y p e o p l e a r e p r o u d o f, t r u s t i n a n d g r o w w i t h ; p r o v i d i n g f i n a n c i a l i n d e p e n d e n c e t o e v e r y l i f e w e t o u c h .” W i t h t h i s i n m i n d , R e l i a n c e L i f e c a t e r s t o f i v e d i s t i n c t s e g m e n t s , n a m e l y P r o t e c t i o n , C h i l d , R e t i r e m e n t , S a v i n g & I n v e s t m e n t , a n d H e a l t h ; f o r i n d i v i d u a l s a s w e l l a s G r o u p s / C o r p o r a t e e n t i t i e s . • R e l i a n c e L i f e I n s u r a n c e C o m p a n y i s a p a r t o f R e l i a n c e C a p i t a l , o n e o f I n d i a ' s l e a d i n g p r i v a t e s e c t o r f i n a n c i a l s e r v i c e s c o m p a n i e s , w h i c h r a n k s a m o n g t h e t o p p r i v a t e s e c t o r f i n a n c i a l s e r v i c e s a n d n o n - b a n k i n g c o m p a n i e s , i n t e r m s o f n e t w o r t h . R e l i a n c e C a p i t a l h a s i n t e r e s t s i n a s s e t m a n a g e m e n t a n d m u t u a l f u n d s , s t o c k b r o k i n g , l i f e & g e n e r a l i n s u r a n c e , p r o p r i e t a r y i n v e s t m e n t s , p r i v a t e e q u i t y a n d o t h e r a c t i v i t i e s i n f i n a n c i a l s e r v i c e s .
  4. 4. ORGANIZATION STUCTURE
  5. 5. FUNCTIONAL AREAS RELIANCE LIFE INSURANCE CO. LTD. AREAS PROTECTION PLANS SAVINGS PLAN INVESTMENT PLANS RETIREMENT PLANS UNIT LINKED PLANS CHILD PLANS HEALTH PLANS
  6. 6. RELIANCE LIFE INSURANCE VISION • “To be a Company people are proud of, trust in and grow with; providing financial independence to every life we touch” • Planning people's future and standing by them in their hour of need goes beyond business, it takes a selfless intent of thinking well for others. Our advisors enjoy high credibility and stature in society, having helped not only shape future of families, but also recuperate in tough times. 'Do Good' is our intent, our philosophy and belief that we aim to bring alive through every life we touch.
  7. 7. THEME OF STUDY At present, there are 24 life insurance companies operating in India flourishing with a growth rate of 15-25 %. Thus, Insurance sector in India is a massive one and together with banking services, insurance services add about 7% to the country’s GDP. This study focuses upon the changing dynamic of the insurance industry and suggestive risk management framework and practices.
  8. 8. OBJECTIVE OF THE STUDY Objective of this study can be summarized in following points: 1. To study the impact of risk management on life insurance company. 2. To evaluate the benefits of such measures in life insurance companies. 3. To identify the level of risk management in insurance companies. 4. To identify the gap between the prevailing risk management framework and requirement of the time. 5.. To develop a good framework that abides with the guidelines of IRDA for risk management in life insurance companies.
  9. 9. NEED OF RISK MANAGEMENT IN INSURANCE Risk management involves identifying, assessing, and mitigating risk. The beauty of a well-implemented risk management program is it's built on a foundation of standardized risk assessments to help companies prioritize their risk based on its potential impact
  10. 10. SCOPE OF RISK MANAGEMENT & INSURANCE The scope of the study will include the following: 1. Identification of all major internal and external risks 2. Scrutiny of all existing major insurance policies 3. Applicability / eligibility of discounts in premium 4. Application of suitable clauses, warranties and conditions 5. Selection of insurance coverage on the basis of risk analysis 6. Providing guidelines on documentation requirements, procedures for claims under various policies
  11. 11. WHAT IS RISK An uncertain event or condition, which if occurs, would have an undefined or unknown impact on achievement of objective. Causal Forces • Natural Perils: Fire, wind, hail, explosion. • Human Perils: Theft, riot, vandalism, negligence. • Economic Perils: Stock market declines, inflation, technological advances.
  12. 12. INSURANCE Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss. Insurance that pays out a sum of money either on the death of the insured person or after a set period. An entity which provide As insurance is known as an insurer, insurance company, insurance carrier or underwriter
  13. 13. RISK MANAGEMENT IN INSURANCE Definition: In the world of insurance, risk management refers to identifying potential risks in advance, analyzing them and taking precautionary steps to reduce the risk. These financial risks might be in the form of high inflation, volatility in capital markets, recession, bankruptcy, etc. For example, a ULIP plan is considered a less risky investment. On the other hand, investment in equity & traditional plan is considered a risky venture. While practicing risk management, equity investors and fund managers tend to diversify their portfolio so as to minimize the exposure to risk.
  14. 14. RISK MANAGEMENT PROCESS “Risk Management is the process of measuring, or assessing risk and then developing strategies to manage the risk.” “Risk management is an integrated process of delineating specific areas or risk, developing a comprehensive plan, integrating the plan, and conducting the ongoing evaluation.”
  15. 15. ESTABLISH THE CONTEXT IDENTIFY THE RISK ANALYZE THE RISK PLANNING MONITOR & REVIEW RISK MANAGEMENT PROCESS
  16. 16. STEP 1. ESTABLISH THE CONTEXT Before risk can be clearly understood , it is important to understand the context in which it exists. You should define the relationship between your club and the environment that it operates in so that the boundaries for dealing with risk are clear. STEP 2. IDENTIFY THE RISK The purpose of this step is to identify what could go wrong (likelihood) and what is the consequence (loss or damage) of it occurring Key questions to ask include: What can happen? List risks, incidents or accidents that might happen by systematically working through each competition, activity or stage of your event to identify what might happen at each stage. How and why it can happen? List the possible causes and scenarios or description of the risk, incident or accident. What is the likelihood of them happening? What will be the consequences if they do happen?
  17. 17. STEP 3. ANALYZE THE RISK This involves analysing the likelihood and consequences of each identified risk and deciding which risk factors will potentially have the greatest effect and should, therefore, receive priority with regard to how they will be managed.
  18. 18. STEP 4. PLANNING A risk action plan is the course of action which an organization agrees upon to help them to address potential risks, reduce the likelihood of these risks occurring and to lessen the impact of these risks if they do occur. STEP 5. MONITOR & REVIEW The final step in the 'five steps' process, never really ends as monitoring and review of your risk assessment to make sure it stays valid is an ongoing process Monitoring and review of circumstances must occur to see whether the measures implemented have reduced risks effectively and whether more needs to be done.
  19. 19. RISK MANAGEMENT PRACTICES IN INDIAN INSURANCE INDUSTRY Insurance industry is keen in identifying the risks pertaining to their business. The property, interruption and liability related risks are keenly looked at by the insurers. The risk management services like underwriting inspections or post loss inspections for settlement claims are used by them in India. The support of public sector insurance companies sponsored organizations like Loss Prevention Association of India (LPA), Tariff Advisory Committee (TAC) was availed by the insurers in addition to the in-house services of individual companies. In addition to their utility for insurance underwriting business risk management (RM) consultancy services are considered as the value addition to the clients of insurance companies. The advent of multinational companies and realization of importance of RM services by the clients have forced insurance companies to bring the innovative services of RM consultancy to the Indian markets.
  20. 20. RESEARCH METHODOLOGY • LITERATURE REVIEW • DATA COLLECTION • LIMITATION OF THE STUDY • FINDINGS AND SUGGESTION • ANALYSIS AND INTERPRETATION • CONCLUSIONS
  21. 21. LITERATURE REVIEW Risk Management and Insurance Review publishes respected, accessible, and high-quality applied research, and well-reasoned opinion and discussion in the field of risk and insurance. The Review's 'Feature Articles' section includes original research involving applications and applied techniques. The 'Perspectives' section contains articles providing new insights on the research literature, business practice, and public policy. The 'Educational Insights' section provides a repository of high-caliber model lectures in risk and insurance, along with articles discussing and evaluating instructional techniques.
  22. 22. DATA COLLECTION Data collection is the process of gathering and measuring information on targeted variables in an established systematic fashion, which then enables one to answer relevant questions and evaluate outcomes. Regardless of the field of study or preference for defining data , accurate data collection is essential to maintaining the integrity of research. Generally we can collect data from two sources, primary sources and secondary sources. Data collected from primary sources are known as primary data and data collected from secondary sources are called secondary data. Primary data are also known as raw data. Data are collected from the original source in a controlled or an uncontrolled environment. Example of a controlled environment is experimental research where certain variables are being controlled by the researcher. On the other hand, data collected through observation or questionnaire survey in a natural setting are examples data obtained in an uncontrolled environment. Secondary data are data obtained from secondary sources such as Reports, books, journals, documents, magazines. Secondary data as information is used in this report which is directly collected from official data and employees Of reliance life insurance co. ltd. Pathankot India
  23. 23. LIMITATION OF THE STUDY Following are the limitation of the study:- 1. The study is limited by constraints of resources, access and time. 2. The study could have been done on every suburbs of India for respondents to complete questionnaire for the study. 3. Language is another access limitation as it will be difficult translating some statements into local dialects perfectly. 4. The maximum amount an insurer or reinsurer can be obligated to pay in any one loss event. 5 . The sample size of the study is limited.
  24. 24. FINDINGS & SUGGESTION 1. In this study, we had divided prospective customers into four .s per risk attached to them. The study shows that they comprise 40% of population. 2. This study shows that 59% people are below 35 yrs of age. It shows that majority of people of . are young. 3. The study further shows that only 11% population of india is above 56 years of age. 4. The study reveals a descending pattern in income group category vise. . belongs to higher income group and . belongs to lower income group. 5. The income and age group data shows that an elderly person as well as a low income person can also fall in while a young person with bad habits may fall into 6. The study suggests that whether a person is ideal to be insured or not cannot be judged on the basis of a single factor. 7. The study further shows that 17% people of . have not disclosed their income. But income is an important part while insuring someone. Income ensures regular premium payment. 8. The study also shows that the people who did not disclose their income were either housewife, retired or had agriculture as their occupation. Only very few businessman were there who did not disclose their income. 9. The study shows that 46% people were retired and 15% housewife, both does not have any source of income. 12% of people belong to agriculture and 27% people belong to business, which had income but did not disclose them. 10. There were 39% people who had income but did not disclose. It may be because of lack of trust. 11. The study shows that the average income of people of india is 3 to 5 lac
  25. 25. ANALYSIS & INTERPETATION RESPONDENT DEMOGRAPHIES This table represents that there were more number of male respondents than female. Here the sex ratio is 75 per 100. As per the census table of 2011, the sex ratio of Pathankot is 1.56 lakh. Majority of respondents in this study were below 35 years of age. Additionally, there were a group of respondent who did not participate in any economic activity but majority of respondents belonged to service sector. The majority of respondents fall under income category of 12 to 15 lacs annual income.
  26. 26. CORRELATION BETWEEN FACTORS AND RESULT
  27. 27. INTERPRETATION OF DATA Total population of Pathankot which can be insured can be categorized as follows as per the risk they are exposed to:- 46% of population falls in Category A hence there are ample customers in Pathankot region who can be insured with minimal risk for insurance company.
  28. 28. The percentage of people of different age group in Pathankot region who fall in Category A are as follows:- The people who fell in category A were mostly of young age as 59% people were below 35 yrs age. Pathankot is an attractive place for insurance company as it has ample young population.
  29. 29. The percentage of people of different age group in Pathankot region who fall in Category B are as follows:- The people who fell in category B were of older age. Only 16 % people were below 35 yrs of age while mostly people fell in 46-55 yrs. Company must avoid giving insurance to those people who are above 56 yrs of age if it has a choice.
  30. 30. The percentage of people of different age group in Pathankot region who fall in Category C are as follows:- The people who fell in Category C were mostly of 46-55 yr age group. They are not very ideal people to be insured. Company should give preference to younger people to give insurance
  31. 31. The percentage of people of different age group in Pathankot region who fall in Category D are as follows:- Category D people mostly belong to 56+ age group. They are not the ideal group to be insured. Company should not give insurance to such people.
  32. 32. CONCLUSIONS 1. An insurance company is in business of mitigating risk but it itself is exposed to so many risk. One of such risk is insuring a person whose claim may exceed the amount of premium he had paid resulting into loss for organization. 2. Pooling of insured reduces such risk but what if company does not follow any strategy and make a pool of risky customers. 3. One of the mode of marketing in insurance sector is aggressive selling thus there are chances that a sales manager pick up a risky person as a prospective customer to fulfill his target. 4. This is the reason why companies underwrite risk. So that company can charge different premiums from different customers for same sum assured. 5. Every company has its own calculators to calculate premium. 6. This study is just an effort to take an insight into the probability that an insurance company picks up a risky customer for insurance when there are so many less risky customers out there. You can call it as an opportunity cost for company.
  33. 33. THANK YOU

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